Innovation is generally considered to be the development, introduction or implementation of new or significantly improved goods, services or processes. Innovation is a key driver of economic growth.

The 2007-08 innovation data were collected in the 2007-08 Business Characteristics Survey (BCS). This survey collected Information about four broad types of innovative activity undertaken by businesses in Australia: goods or services; operational processes; organisational/managerial processes; and marketing methods. The survey also covered three statuses of innovation: introduced or implemented; still in development; and abandoned.

Based on the combination of type and status of innovative activity, two statistical measures of business innovation have been produced:

Innovating businesses - businesses that introduced or implemented an innovation during the survey reference period.

Innovation-active businesses - businesses that had undertaken any innovative activity, including the introduction or implementation of an innovation, and/or businesses with an incomplete and/or abandoned innovative activity.

During 2007-08, innovating businesses in Australia represented 39.1% of all businesses; innovation which was incomplete at end-June 2008 was undertaken by 22.5% of all businesses; innovation which had been abandoned during the year was undertaken by 6.9% of all businesses; and 44.9% of businesses were innovation-active in the period (table 26.7).

26.7 Businesses involved in innovation(a)(b)

%

Businesses which introduced or implemented:

Any new or significantly improved goods or services

21.9

Any new or significantly improved operational processes

17.6

Any new or significantly improved organisational/managerial processes

19.0

Any new or significantly improved marketing methods

14.6

Any of the above (i.e. Innovating businesses)

39.1

Businesses with innovative activity which was still in development(c)

22.5

Businesses with innovative activity which was abandoned(c)

6.9

Proportion of businesses that were innovation-active

44.9

(a) Proportions are of all businesses.

(b) During 2007-08.

(c) Innovative activity includes any work that was intended to result in the introduction or implementation of new or significantly improved goods, services or processes.

The proportion of innovating businesses increased with business size, ranging from 31.6% for businesses with 0-4 people employed, to 65.9% for those businesses with 200 or more people employed. At the industry level, Wholesale trade had the highest proportion of innovating businesses (51.4%), followed by Retail trade (50.9%) (table 26.8).